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GST Council to Accept Call on Fund Compensation Gap: Finance Minister


NEW DELHI: Finance Minister Nirmala Sitharaman said on Friday that the GST Council will reach common ground on ways to compensate states for lost revenue, amid opposition accusation that the Center you are breaking your promise to pay compensation.
Responding to a discussion on supplemental subsidy demands at the Lok Sabha, Sitharaman said he will honor the commitments made by his predecessor Arun Jaitley regarding the payment of compensation for the goods and services tax (GST).
“Even if we are in an act of God situation, but we will discuss in the Council how to compensate the states … The Council will take a call on how to borrow to fill the (income) gap,” he said. .
The minister, however, ruled out financing the revenue shortfall of India’s consolidated fund, saying that the amount should be paid with the compensation kit.
The states are looking at a GST revenue shortfall of Rs 2.35 lakh crore this fiscal. Of this, according to the Center’s calculation, an estimated Rs 97,000 crore is due to the implementation of the GST, while the remaining Rs 1.38 lakh crore is due to the COVID-19 pandemic.
At the end of last month, the Center gave states two options to borrow Rs 97,000 crore from a special window provided by the RBI, or Rs 2.35 lakh crore from the market and also proposed to extend the compensation tax applied to luxury goods, demerit and sin beyond 2022. to repay the loan.
On the opposition’s accusation that the government is breaching its commitment to pay compensation by calling COVID-19 an ‘act of God’, Sitharaman said: “It is an irresponsible comment towards a responsible government, led by the prime minister. Narendra Modi “.
The chief ministers of six states not governed by the BJP (West Bengal, Kerala, Delhi, Telangana, Chhattisgarh and Tamil Nadu) have written to the Center opposing options that require states to borrow to cover the GST deficit.
Sitharaman further said, “We are ready to discuss. We are bringing everyone together and the Council will find an opinion. This is my optimistic expectation. The Center is not reneging on (its commitment).”
Confronting the opposition for ridiculing his comment that COVID-19 is an ‘act of God’, he said it would have been acceptable if he had said ‘force majeure’.
She said the Center has given states their fair share of the refund even at the time of COVID-19 when the Center’s finances are stressed.
Without naming the UK, the minister said that a nation that has given a 15 percent fiscal stimulus now plans to raise taxes.
“We are not contemplating raising taxes to offset what we gave (as a stimulus),” Sitharaman said.

Times of India